Turkey fof w paper nov14

“ The Future of Work in Turkey” Tomorrow welcomes today where East meets West 1

The Future of Work in TurkeyTomorrow welcomes today where East meets West

“ The Future of Work in Turkey” Tomorrow welcomes t oday where East meets West

November 2014


The pace of innovation is accelerating, driving a dramatic transformation in industry. At GE, we call this transformation the Future of Work. This is a revolution in how we make things that is driven by three fundamental forces: the Industrial Internet, Advanced Manufacturing, and the Global Brain.

The Future of Work is poised to radically change design and manufacturing processes, supply chains and distribution channels, and the way work is performed and organized.

IntroductionIntroductionIntroductionIntroduction

1. The Industrial Internet integrates cloud-based analytics with industrial ma-chinery. It merges software and hardware—big data with big iron. Machines are now increasingly able to analyze their environment, react, and interact with each other and with us, generating insights that allow people to operate equipment more efficiently. We can shift from reactive to preventive maintenance—fixing machines before they break, dramatically reduc-ing unplanned downtime, and raising the efficiency of individual machines as well as entire systems, such as reducing delays in hospitals or air traffic or increasing the ef-ficiency of power distribution.1

2. The second driving force, Advanced Manufactur-ing, links all aspects of the manufacturing value chain—design, product engineering, manufacturing,

supply chain, distribution and remanufacturing (or servicing)—into one cohesive and intelligent system. New production techniques like additive manufacturing allow us to accelerate the cycle of design, prototyping and production, which increases speed and flexibility of man-ufacturing at lower costs. The “digital thread” connecting all aspects of the manufacturing process also allows real-time adjustments to production and supply and distribution logistics.

3. The third driving force is the Global Brain. This is essentially the collective intelligence of human beings across the globe, integrated by digital communication networks. Open-source plat-forms and crowd-sourcing are quickly emerging as effective ways to unleash the creativity and entrepreneurship po-tential of masses of people

together, no matter where in the world they sit. Companies gain flexibility, while workers gain greater entrepreneurial control over their skills and talents. The Global Brain is redefining the relationship between employers and em-ployees, to the benefit of both.

As global economic growth brings to millions more people both connectivity to the Internet and the time to take advantage of it, the Global Brain will become vastly bigger and more powerful in the coming decades. Better access to clean water, food and healthcare will free up precious hours—which were previously absorbed attend-ing to basic survival needs—to both tap and contribute to the global stock of knowledge.

It is redefining the competitive landscape across industrial sectors, and will impact inter-national competitiveness and trade patterns, as well as the distribution of global growth.

It is also transforming tradi-tional industrial assets into interconnected machines, with a much more extensive and powerful range of capa-bilities. In a similar way, indus-trial companies that combine the digital and the physical open entirely new dimensions in the way they operate and

1See Annunziata, Marco and Peter Evans “The Industrial Internet: Pushing the boundaries of minds and machines”, GE White Paper, 2012; and “The Industrial Internet @ Work”, GE White Paper, 2013.


Through this new wave of innovation, industrial companies like GE can help their customers realize substantial productivity gains and cost savings, improving competitiveness across the board. Scaled across Turkey’s economy, this transformation also holds the key to the country’s future.

in the value they can provide to customers and shareholders.2

Connecting the digital world of research, design, engineering and manufacturing enables a company to drastically reduce the time needed to introduce new products, leading to faster responses to customer needs and higher engineering produc-tivity. As real-time factory and supply chain data are translated into insights that operators can act on, factories and supply chains are able to respond much faster to shifts in customer needs and external shocks. With the ability to continuously im-prove a machine’s performance throughout its lifecycle, oper-ators can increase machine uptime, throughput, and inventory turnovers. Increasing responsiveness leads to increasing sales.

The first signs of this transformation are already visible in Turkey, as we will detail in this paper. Leveraging the full potential of these innovations will require effort and investment on the part of both the private and the public sector. Turkey has the necessary ingredients, including the cultural legacy and the enthusiasm to achieve. But we firmly believe that the determi-nation of implementing these innovations holds the key to a successful transformation of Turkey’s growth model— one that can yield sustained growth in living standards in the coming decades.

2Marco Annunziata, “The Value of Interconnectedness”, GE White Paper, October 2014


After a very successful growth run during the past decade, growth has lost steam, and Turkey is at risk of getting stuck in the “Middle-Income Trap”. To break out of the trap and fuel sustained growth in jobs and living standards, Turkey needs a new decisive wave of reforms and, most importantly, it needs to accelerate innovation. Harnessing the potential of the Future of Work should be the crux of this strategy.

Turkey’s “growth miracle”: 2002—2007

Political and macroeconomic instability during most of the 1980s and 1990s, culminated in a currency and banking crisis in early 2001. This was a turning point in Turkey’s development, as the country turned the crisis into an opportunity: supported

by an IMF program, Turkey embarked on a major reform of the banking sector and significant fiscal consolidation. Turkey rapidly reaped the benefits of this policy adjustment—growth accelerated, and most macroeconomic indicators (e.g., public debt dynamics, inflation) improved significantly.

Real GDP growth averaged an impressive 7 percent during 2002—2007. Public debt was drastically cut, from nearly 80 percent of GDP in 2001 to less than 40 percent in 2007. Infla-tion, which had averaged 75 percent between 1991 and 2001, dropped into single digits. And per capita GDP in current US dollars more than doubled, from about $4,000 in 2000 to $9,000 in 2007.

These waves of innovation are coming just as Turkey’s economy has reached a critical turning point.

Macroeconomic Outlook: Rebooting Turkey’s Growth

Real GDP (%) Real GDP (%; 10-year moving average)

12.0

10.0

8.0

6.0

4.0

2.0

0.0

-2.0

-4.0

-6.0

-8.0

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Long View: GDP Growth (%)Figure 1


Equally important, a strong financial sector and sovereign balance sheet (-cum-fiscal position) put Turkey in a much stronger position to face the global financial crisis of 2008—09: after a deep recession in 2009, when out-put contracted by 5 percent, the economy rebounded strongly, recording growth of about 9 percent in the subse-quent two years.3

Loss of momentum: is Turkey “trapped”?

This strong recovery, however, was partly fuelled by excep-tionally supportive external circumstances, and it masked an underlying weakening in macroeconomic fundamen-tals and policies. Extremely low world interest rates compressed funding costs in Turkey and resulted in a credit boom (the credit to GDP ratio

more than doubled, to 65 per-cent) and a substantial rise in household debt (to 50 percent of disposable income, up from about 30 percent).

The progress in macroeco-nomic indicators registered in the previous decade also seems to have come to a halt. Inflation has stabilized at about 7—8 percent, a relatively high rate in a global environment of very low

inflation. Similarly, the current account deficit has settled in a range of 6—9 percent of GDP, an uncomfortably high level that has left Turkey heavily reliant on foreign financing and vulnerable to volatility in global capital flows. This vul-nerability was clearly exposed in the summer of 2013, when the Fed first manifested its intention of scaling back its quantitative easing, triggering turmoil in financial markets.

Perhaps more disturbingly, per capita GDP in (nominal) US$ terms has made very little progress since 2007 and labor productivity has virtually stagnated since then. As the chart below shows, Turkey’s productivity is still higher than Mexico’s and Brazil’s. Since 2007, however, Poland has overtaken Turkey, Chile has almost caught up, and Korea has moved well ahead.

Moreover, while previous reforms have been effective in broadening Turkey’s geo-graphical base with infrastruc-ture investment that enabled the rise of the “Anatolian tigers,” and improved access to health and education, their growth benefits have now arguably petered out.

Turkey’s current economic situation bears many of the hallmarks of the MIT: per cap-ita income, around $ 11,000,

is right in the critical range identified by the economic literature—the range where further progress has proved elusive for the vast majority of emerging market countries.4 The MIT has become widely feared because escaping it is statistically very difficult: a recent World Bank study es-timates that out of about 100 countries that had reached middle income levels by 1960, only 13 had moved to high income levels by 2008.5

The intuition behind the middle-income trap concept is simple: moving from poverty to middle income levels is relatively easy and can be achieved by moving labor from agriculture to low-cost manufacturing, which creates an abundant supply of cheap labor; this attracts foreign investment, which in turn al-lows the adoption of imported technologies, yielding rapid productivity gains. As incomes rise, however, the low-cost ad-

Real GDP (%; 10-year moving average)

30

25

20

15

10

5

0

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

TurkeySouth KoreaPolandMexicoChileBrazil

Brazil

Mexico

ChileTurkey

Poland

South Korea

3It is worthwhile asking what the drivers of this growth have been from the supply side. A recent “growth accounting” study finds that a considerable portion of growth during this period was due to so-called “total factor productivity” growth, i.e., productivity growth after stripping out the effects of physical factor—labor and capital—accumulation. The sources of this TFP growth are much less certain, however. Rather than technology and innovation, which is what TFP growth is typically attributed to, strong macro management, sectoral shifts (from agriculture to industry and services), and data deficiencies appear to top the list in Turkey’s case. See Izak Atiyas and Ozan Bakis (2014), “Aggregate and Sectoral TFP Growth in Turkey: A Growth Accounting Exercise”, Iktisat, Isletme ve Finans, No 29/341.

Labor Productivity (GDP per hour worked, PPP)Figure 2


vantage gets eroded, and the scope for further productivity gains through imported tech-nologies is gradually exhaust-ed. Countries often find that they can no longer compete with lower-wage competitors on low-value-added man-ufacturing, and cannot yet compete with more advanced competitors on higher val-ue-added exports.

Making the leap to high income requires a country to step up its game, relying on innovation to move up the value-added chain, so that better technologies can further boost productivity, sustaining the rise in wages and incomes without com-promising profitability and competitiveness. With 75% of exports concentrated in

agriculture as well as low- or medium-level manufacturing, Turkey has ample scope (and need) to climb the value-add-ed ladder and strengthen its external competitiveness.

Achieving this requires strong investment in the adoption of new technologies, structural reforms to improve the busi-ness environment and foster

both domestic and foreign investment, and prudent macroeconomic policies to bolster economic and finan-cial stability.

In this regard, it is particu-larly disturbing that Turkey’s growth performance has been undermined by a significant decline in savings and invest-ment over the past decade.

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

18K

16K

14K

12K

10K

8K

6K

4K

2K

10K

8K

6K

4K

2K

0K

Current $ (left hand axis)Constant (2011) $

27.0

25.0

23.0

21.0

19.0

17.0

15.0

13.0

11.0

Total Savings Total Gross Fixed Investments

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Long View: Saving and Investment Rates

Turkey: Per Capita GDP

Figure 4

Figure 3

4 See Barry Eichengreen, Donghyun Park and Kwanho Shin (2013), “Growth Slowdowns Redux: New Evidence on the Middle-Income Trap”, NBER Working Paper n. 18673; and Shekhar Aiyar, Romain Duval, Damien Puy, Yiqun Wu and Longmei Zhang (2013), “Growth Slowdowns and the Middle-Income Trap”, IMF Working Paper. For a study specifically on Turkey, see Gokhan Yilmaz (2014), “Turkish Middle Income Trap and Less Skilled Human Capital”, CBRT Working Paper No 14/30.

5 Equatorial Guinea, Greece, Hong Kong, Ireland, Israel, Japan, Mauritius, Portugal, Puerto Rico, Korea, Singapore, Spain and Taiwan. Five of these are part of the “Asian miracle,” and four benefited from membership in the Eurozone, which delivered an (unsustainable) improvement in credit conditions.


The savings rate, which was about 25% in the early 1990s, has dropped all the way to 13—15%, capping the investment ratio at about 20%, well below the ratios prevailing in some key emerging market competitors, such as Indonesia, Korea, Mexico and Chile (not to mention China).6

Rebooting growth through innovation

To break out of the Middle-Income Trap, Turkey needs to reboot its productivity and competitiveness with a new growth model. Turkey’s lawmakers recognize this in the country’s latest Five-Year Development Plan.7 Accelerating innovation and harness-

ing economic efficiencies from the Industrial Internet, Advanced Manufacturing, and the Global Brain can play a crucial role in helping Turkey unlock this potential.

Today, Turkish entrepreneurs are well aware of the importance of innovation. The 2014 GE Global Innovation Barometer, which surveyed senior executives actively involved in their companies’ innovation strategy across 26 markets, showed that Turkish entrepreneurs are keenly conscious of the value of collabora-tion: Turkey ranks in second place among the countries that have seen an increase in companies’ revenues and profits due to collaborative innovation:

45

40

35

30

25

20

15

10

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

TurkeyMexicoKoreaIndonesiaChileBrazil

Share of companies that recorded a rise in revenue and profits due to collaborative innovation activities

Investment (% GDP)

Figure 6

Figure 5

6By way of comparison, when Korea broke decisively out of the middle income trap in the early 2000s, its savings and investment ratios were in excess of 30%.

79% 76% 76% 75%72% 71% 71% 70% 69% 68% 67% 66% 66% 65% 64%

60% 60%57%

52% 50%46%

41%

64% 63% 61% 61%

Less collaborative (under-index)More collaborative (over-index)100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Algeria

Turke

y

Indonesia UAEIndia

SwedenIsr

aelKSA

Singapore

Mexico

Brazil UK

Kenya

South Africa

USA

Malaysia

Australia

Canada

Germany

China

Nigeria

Poland

South KoreaJa

panIta

lyRussi

a

Global average

64%

In the Barometer, Turkish entrepreneurs stand out as the most open to disrupting their business processes in order to take advantage of the new wave of innovation…


These attitudes position Turkey well to take advantage of the Future of Work; disruption and rapid iteration are at the heart of these themes. And it has already begun to take hold: Indus-trial Internet and Advanced Manufacturing solutions have been implemented in some areas of electronics manufacturing and in the car industry, robotics is a reality, and 3D printing has quickly achieved popular notoriety, with more companies looking to adopt additive manufacturing as a way to increase speed and flexibility in their operations. Companies like Artemis, Reengen and Visiothink provide successful example of high-tech startups. The Maker Movement is already vibrant: The first Fab Lab (a MIT project) was established in Kadir Has University, and opened

in June 2014. In May 2014 the first Living Lab (an EC project) opened in Basaksehir.

In the following section, we will discuss Turkey’s innovation en-vironment, and describe how the Industrial Internet, Advanced Manufacturing, and the Global Brain are beginning to take hold in Turkey. We will then explore what needs to be done to accel-erate them—so Turkey can use the Future of Work to increase efficiency and competitiveness, and thereby fuel lasting growth.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Turke

y

Mexico

Brazil

AlgeriaKenya

Nigeria

Canada

South Africa

India UKIta

lyUAE

Israel

Malaysia

IndonesiaChina

KSARussi

aUSA

Australia

Sweden

Singapore

Poland

Germany

Japan

South Korea

87%

46%

87%

73%

86%

61%

80%

51%

73%

64% 70

%51

%

69%

53%

69%

69%

56% 64

%70%

66%

62% 66

%

64% 69

%

63%

63%

63%

65%

61%

63%

60%

61%

60% 65

%

51%

59%

51%58

%

58%

56% 59

%55

%

69%

55%

44%

54% 57

%54

%

55%

49%

48%

41%

When innovating, companies must encourage creative behaviors and disruptive processes in the business, especiallyThe difficulty to come with radical and disruptive ideas as a key challenge killing your business’s ability to innovate efficiently, independently from the profile of their company

Openness to disruption

The importance of speed in adopting new technologies

Figure 7

Figure 8

7A recent example of the former can be found here; as for the latter, many informed observers have already noted that implementing the tenth Five-year Plan is critical to reinvigorating growth, reaching the so-called “2023 goals” or breaking through the MIT. See, for instance, here and here.

88%84%

80% 77% 76% 76% 75% 75% 73% 73% 73% 72% 71%66% 65%

57% 57% 57% 57% 55% 53%

40%

64% 64% 63% 61%

Under-indexingOver-indexing100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Mexico

Turke

yBra

zilIndia

AlgeriaRussi

aKenya

South Africa

Italy

Nigeria

PolandIsr

ael

CanadaUAE

USA

Australia

South Korea

Germany

MalaysiaChina

IndonesiaJa

pan UK

Singapore KSA

Sweden

Global average

67%

…and they rank among the most convinced that fast adoption of new technologies is a must.


Turkey’s Innovation Environment Innovation and entrepreneurial environment

Turkey has historically been characterized by a strong entrepre-neurial DNA that can create fertile ground for innovation. The current environment is a combination of government initiatives at the central and local level, and private sector initiatives like technoparks, startup incubators and crowdsourcing platforms.

In 2010, the TÜBİTAK published a “National Science, Technology and Innovation Strategy Report” for 2011-16. The strategy aims to continue and maintain the momentum of the previous the National Science and Technology Policies Action Plan (2005-2010), to spur the progress in science, technology and innova-tion needed to meet the 2023 targets.

The Ministry of Development has launched a “Regional Innova-tion Strategies” initiative, to be implemented through regional Development Agencies—and many have already completed and published their regional strategies. The İzmir Development Agen-cy unveiled a very comprehensive action plan in May 2001 with the participation of stakeholders like EBİLTEM, TÜİK (Turkey Statis-tics Bureau), and İZKA (Izmir Development Agency). This strategy has emerged as a role model for PPP (Public Private Partnership).

Turkey’s Exporters Assembly (Türkiye İhracatçılar Meclisi-TİM) has already demonstrated interest in innovation ecosystems for exporters and producers and it organizes one of the biggest

and most impactful innovation conferences called “Innovation Week,” which every year gathers stakeholders from public and private industries, universities and NGOs.

While innovation ecosystems are increasingly dispersed and Web-Based, physical proximity can still play an important role in accelerating innovation. Many countries have created Science and Technology Parks and Zones to facilitate access for firms to key factors as R&D, human capital, innovation infra-structures, venture capitalists, technological capital and social capital. There are currently over 30 Technoparks in Turkey. Technoparks create local ecosystems that facilitate the ex-change of ideas and can often accelerate the development and the financing of innovations.

ODTU Technopark is one of the best examples and is a role model for MENA countries. It hosted a workshop the summer of 2014 for connecting MENA countries’ science and technology parks to each other. The workshop series started in November 2013, with the cooperation of the European Investment Bank. Technopark İstanbul (TPI) offers free office space to 35 incubator projects and regular business support seminars to its dozens of R&D partners working on biotechnology, energy solutions and maritime technology. Techoparks also house R&D centers of local (e.g., Leading Turkish Consumer Electronics Manufacturer at ITU Teknokent and MNCs and GE at TPI).

As in Technoparks, several startup incubation centers and ac-celerator programs are now active at universities, (e.g., Girisim Fabrikasi, SU-COOL, EBILTEM, Inovita, Garaj), at companies, (e.g., TEB Girisim Evi), and in other contexts (e.g., eTohum, mentor net-

The Future Of Work In Turkey: State Of Play


works like Endeavor Turkey, GE-CoMeT), as well as via new business models introduced by TTGV (Turkish Technology Development Foundation).

Startup funding

The emerging crowd-funding scene in Turkey in the last few years provided thousands of projects with financial resources via supporters from the Internet. This is a successful model for start-ups especially in emerging economies like Turkey, as the feedback helps entrepreneurs in the early stages of the project development. The lack of a proper legal framework, however, inhibits the further growth on this segment and slows the participation of foreign investment. All of the current crowd-funding sites in Turkey operate on a reward- or prize-based model. The Capital Markets Board (SPK) has announced in April 2014 that they are working on a policy framework for crowd-funding to be included in the strategic planning for 2014-2016.8

Success stories

Turkey’s innovation environ-ment has already brought to life successful examples of developments of new technol-ogies and business models:

Pozitron has developed suc-cessful solutions for mobile banking, payments and commerce for businesses. The company was acquired in February 2014 for $100 million by Monitise, a leading mobile technology company, showing that a Turkish soft-ware company can be global-ized with successful exit.

Peak Games, founded in October 2010, ranks as one of the largest online and mobile gaming companies globally with over 30 million month-ly active users in over 150 countries.

Alvimedica is a new biomedi-cal company with a target of $1B exports by 2023. Alvimed-ica is the world’s 6th biggest firm today in their sector. Their ultimate target is to improve high technology for curing some cancer types in their original location in the body. Ehastam is a good example of the new generation of start-ups in health sector. Ehastam is an online social platform that brings together doctors and patients.

These success stories give us a taste of how Future of Work innovations can help Turkish entrepreneurs create success-ful new ventures. But more work is needed to bring this to the scale needed to transform

Turkey’s economy and accel-erate growth.

The Maker Movement in Turkey

“Makers” are people who like to tinker, experiment and play with gadgets. Broadly speaking, the Maker culture ranges from people who like to grow their own vegetables to those who invent and build a home-made satellite, from those brewing beer at home or building a bicycle in a garage, to those developing a new mobile app.

In the large cities of Turkey, especially in Istanbul, there are hacker spaces, maker spaces, co-working and co-creation spaces, and the number is growing. Some are within universities, some in the local proximity of the commu-nity, and some of them are very central, easy to access

and open to the public.

The first Fab Lab (a MIT proj-ect) was established in Kadir Has University, and opened in June 2014. In May 2014, the first Living Lab (an EC project) has opened in Basaksehir, supported by the municipality. This trend will continue. Many municipalities are working on science centers, maker spac-es, and co-working spaces, and the interest of the public, especially young people, is huge.

Slowly but surely, this move-ment will pick up. More stu-dents and graduates will be equipped with state-of-the-art capabilities, which they will be able to apply in their new work environment, either in employment or as an entre-preneur. Companies, commu-nities and even larger orga-nizations can make use of these skills and competencies in various ways. The Future of Work will be augmented by these new skills and multi- disciplinary approaches.

Industrial InternetThe Industrial Internet has already begun to take hold in Turkey—and it is known also under different names, such as the Internet of Things, or

8There are also a number of venture capital firms in Turkey, e.g., 212, Galata Business Angels, Earlybird Venture Capital, Hummingbird Ventures, TRPE, Inovent, Inventram, 3TS, and Endeavor Catalyst etc., angel investors, e.g., Keiretsu Forum and other funding platforms, e.g., fongogo, fonlabeni, yenifikiryenihayat, crowdfon, becoming available.

But the skills developed during tinkering are essential for innovation, research and developing something new—and valuable inventions are sometimes chanced upon while tinkering.


Machine-to-Machine Commu-nication. As we saw earlier in this paper, at the heart of the Industrial Internet are “brilliant machines” that can interact with each other and with hu-mans, and can perform a wide range of tasks, often autono-mously. The Industrial Internet centers on data collection, analysis and transmission. Communication infrastructure therefore plays a crucial part in enabling Industrial Internet innovations.

In Turkey, more work is needed to bolster the Internet infrastructure. The govern-ment has removed one of the main road blocks by removing fees for machine-to-machine communication SIM cards, but the Internet infrastructure in particular fiber network penetration is far from opti-mal, and this is hindering the high transfer rates required for Industrial Internet appli-cations—as all mobile towers and corporate data centers are connected over public Internet. For example, the av-erage Internet speed Turkey ranks at number 53 globally with 5.5Mbps. South Korea is number one with 24.6 Mbps, the USA is number 14 with 11.4 Mbps. In the EMEA region, Turkey has the third slowest Internet connection, ahead of only the UAE and South

Africa.9

Another crucial enabler of Industrial Internet solutions is the rapid development of data analytics and data-driven decision making processes. The analytics process has three layers of complexity: descriptive, predictive and prescriptive. In Turkey, like in most other markets, many use cases of data analytics only refer to the first layer. Descriptive analytics tools show what happened and sometime why it did happen, using filters and dashboards, but do not provide any insights leading to direct actionable items. Turkey has an abundance of qualified industrial engineers who are keen to develop and use pre-dictive and prescriptive ana-lytical tools—and who master the necessary mathematical concepts. Artesis, VisioThink and Reengen are successful examples of Turkish com-panies providing Industrial Internet solutions. GE Turkish Technology Center (GE-TTC) is also generating Industrial Internet solutions for its jet en-gine monitoring globally and testing GE’s Predix platform.

Artesis, a GE minority invest-ment, founded in 1999, devel-oped a unique technology for early warning of pending fail-ures of industrial equipment.

Its software, called iMCM, analyzes industrial Big Data and alerts users to pending faults of equipment and likely time to failure, and suggests remedial actions. This pre-vents unexpected downtime, increasing productivity and efficiency. Installation and use are simple without requiring hardware installation, new hardware, sensors, cabling, equipment shutdown and visits to the site.

VisioThink Ltd. was founded in 2006 by two faculty members of Sabancı University, with the goal of conducting research and software development on spatial analysis and location based services. The team is composed of analysts and developers, with backgrounds on industrial engineering, computer science and busi-ness. VisioThink’s Location In-telligence Tool is a Web-based software that allows analysts to decide on the location of the next set of retail store(s) to open, given the market demographics, competitor location information and other logistical criteria. It lets users customize VisioThink’s location-enabled algorithm library for their needs to help them understand customer behavior. Through the use of various Customer Analytics algorithms such as clustering,

spatial regression, segmen-tation and interaction, clients can better understand how their customers will respond to their products and ser-vices in different geographies with different socioeconomic factors affecting customer behavior. GeoLink is a mobile application platform, which allows its subscribers to query and view the geographic loca-tion of fellow subscribers both on the mobile phone and on the Web. GeoLink is used both for Industrial Internet and location based services. The first service has been launched by Turkcell, the larg-est national mobile operator and actively used. VisioThink’s efforts in location based ser-vices and spatial intelligence lead one of its location based marketing campaigns short listed at GSMA Global Awards 2010.

Reengen is an energy data science company developing big data analytics and energy management solutions for buildings and electricity grids. Reengen’s data science oriented technology employs predictive data analytics, behavioral algorithms and a physics-based modeling of the buildings and grid. Reen-gen’s first product, Provolta— the Building Energy Operating System—enables commercial

9All data is from Akamai The State of the Internet 2014 Q2 Report. [1] http://www.akamai.com/stateoftheinternet/


buildings to reduce energy costs up to 30% by combining real-time sensor measure-ment, automation control and HVAC optimization with dynamic energy modeling and machine learning algo-rithms. Provolta, which can be positioned as the “NEST of commercial buildings”, creates a dynamic picture with a physics-based model of the buildings that takes into account the behavioral characteristics of the assets connected to it. By analyzing energy-consumption-related variables, such as weather forecasts, utility tariffs, build-ing characteristics, behavioral patterns, occupant comfort and demand-response events, its solution is able to make ad-justments to building controls in real-time.

This bottom-up approach gives buildings the ability to understand and control their energy consumption as well as maintain their continuous energy efficiency.

State-of-the-art artificial intel-ligence and machine learning implementations interpret the structured and unstruc-tured data gathered from different building components and convert it into action-able intelligence for building system controls. Reengen also happens to be a winner of GE Turkey Innovation Challenge in 2013.

Advanced ManufacturingThe days when a cheap labor market was Turkey’s com-parative advantage are gone. The political and economic stability of the last decade has increased per capita income, as well as labor costs. Mean-while, the real-time connectivity across the manufacturing pro-cess that we described above (represented visually on mobile devices for foreman, plant managers, and quality workers) means that these operators can make more productive decisions than ever before.

The holistic and algorithmic investigation of this ‘big data’ in the context of manufacturing opens new possibilities, and, as a result, Turkey is shifting toward higher value-added manufacturing. Roles such as data scientists, data visualiza-tion experts, process analysts, and subject matter experts in areas like sensory networks, robotics, or automation are in increasingly high demand.

Use of advanced manufactur-ing technologies like robotics and additive techniques are on the rise in Turkey, as we outline below. For example, GE-TTC is also developing jet engine repair technologies leveraging the addi-tive printing capabilities. But a lot more needs to be done to scale them across Turkey’s industry.

Industry insights from Leading Turkish Consumer Electronics Manufacturer, Senior Executive

Automation has advanced most in electronics manufac-turing in Turkey. The Compa-ny produces electronics for household goods. Components placement is fully automatized, and the control of the flows is fully automated with PLCs and RFIDs. The flow and its data are integrated to the enterprise systems and monitored con-tinuously. Advanced manufac-turing allows the Company’s shop floor to be very flexible, with design and production working very closely together. This gives greater speed and flexibility, which enables the Company to produce small lots of custom made equipment.

The Company provides an interesting case study of the impact of advanced manufac-turing on jobs. With advanced manufacturing, the tradition-al distinction between blue collar and white collar jobs becomes blurred, as more advanced technology requires blue collar workers to also develop more sophisticated skills. In addition, there is a greater need for qualified white collar workers to take charge of planning, running and optimizing the design and production.

As greater productivity drives a greater business volume, a company like the Company faces the challenge of finding enough qualified employees.

Industry insights from Leading International Automotive Manufacturer, Senior Executive

The Company applies CAD/CAM technologies that offer production accuracy and effectiveness by integrating all phases between design and production: robots for high effi-ciency, high-speed production with zero defects (welding of complex or heavy parts, paint-ing of truck cabins) and testing or quality control equipment where electro-pneumatic or electrohydraulic control sys-tems are used.

The Company foresees that their senior technical staff may experience some chal-lenges adapting to the new technologies because their academic background is not sufficiently strong in basic sci-ence, and English, all neces-sary pre-requisites to master the new technologies.

For example, as universal turning and milling machines are replaced by their CNC versions, universal machine operators are not needed anymore where CAD/CAM technologies are applied. But


technical production and maintenance, staff who are capable of dealing with both mechanic and electronic systems, are in high demand since new automation sys-tems are a complex combina-tion of mechanical, electronic and computer sub-systems.

Turkish landscape in robotics

The use of industrial robots is especially common in the automotive industry in Turkey.The big factories of the leading car brands have been built recently and are equipped with high-end technology. Their output is among the highest globally. Automation and the use of robots have had lim-ited impact on staffing so far. Robots have been employed largely to handle heavy duties, such as carrying large parts, welding and painting, with only limited impact on blue-collar workers—and since greater efficiency has fueled output growth, factories are still hiring.

But employment of new white-collar workers is increasing faster. Experts in automation, robotics and process engineering are becoming more important. Going forward, better tech-nology and more widespread automation will require a fast upgrading of the skills in the

labor force in order to sustain rapid employment growth.

Turkish landscape in additive manufacturing10

3D modeling and 3D print-ing already have a history in Turkey, mainly for prototyping in the automotive and white goods industries, and 3D print-ing is now picking up speed. The government is subsidizing the usage and deployment of rapid prototyping and additive manufacturing tools, and 3D printing is extending into new fields, such as jewelry, health-care and other areas of manu-facturing. There are hundreds of 3D printers installed, mainly in Istanbul, for the jewelry industry, most of them within a 10-mile radius.

In healthcare, the usage is becoming more widespread as well. Dental implants and crowns are quite common al-ready, but research on artificial tissues, bone and skin tissue and other parts of the body is proceeding apace, spurred by the sizable potential benefits.

The fact that 3D printing has already achieved significant popularity on the consumer side, with desktop 3D printers becoming very popular and a strong degree of media hype, has raised expectations but has also helped accelerate

the process, helping to build momentum for supportive policies, funding, research ac-tivities and public awareness.

Companies across a range of sectors are expressing interest in the technology, given its potential payoff in cost reduc-tion, more flexible design and rapid prototyping—something that promises to accelerate the diffusion of the technology in the years ahead.

Global BrainCollective development and collaboration

The increasing availability and accessibility of the Inter-net creates a participatory culture that manifested itself in several different forms of collaboration in the last decade. Software develop-ment projects, collecting and sharing data, work distribu-tion by micro-tasking, expert contributions, idea generation and refinement platforms and collective funding of new businesses are all widespread forms of this collective devel-opment concept. Although these types of initiatives start-ed only recently in Turkey, they seem to hold a great po-tential for growth if the legal framework can be fine-tuned in time while the interest is on the rise.

Internet-based initiatives creating business opportuni-ties for freelance workers are becoming quite popular and are helping generate employ-ment and growth. Although they are in their infancy, some of these startups have recently become operational in Turkey and have gained widespread use in a short time period. idemama.com is a platform that brings together a community of freelance designers and SMEs for a number of tasks, ranging from a simple logo design to web site development. 4,700 designers completed more than 4,000 designs for companies through this site. Armut and ehil.com are similar platforms for home services where more than thousands screened and approved local service professionals bid for consumers’ needs in more than 300 categories, ranging from home maintenance and repair to renovation. Ehil.com has recently received an investment of $1 million.

Education, industrial training and talent pool

But connectivity to the global pool of talent isn’t Turkey’s only consideration; increasing the quality of its own talent pool is of utmost importance. In recent years, Turkey has seen a remarkable progress

10This sub-section has been compiled with input from InfoTron / +90, the leading 3D company in Turkey.


in higher education, with a sustained rise in scientific research output. Turkey ranks 4th globally for the pace of growth in scientific articles published between 2006 and 2010, after China, India and Brazil. The number of universi-ties more than doubled in the last decade.

This rapid increase in the number of higher education institutes, however, brought a number of problems that need to be addressed with urgency. Some of these newly estab-lished universities, mostly located in the non-industrial-ized districts of Turkey, suffer from a shortage of academic staff and thus are unable to maintain a full curriculum for some of their undergraduate disciplines. Most of these universities are teaching-only places with limited partici-pation in research. A Faculty Development Program that has been run by the Council of Higher Education of Turkey since 2010 is aimed at training academicians for smaller universities. In the last three years, 15,000 young acade-micians have been assigned to universities all across the country.

Another important aspect of education is the increasing rate of digitalization and the opportunities for using ICT in the learning process. Starting with MIT’s open courseware

(OCW) initiative in the ear-ly '90s, Open Educational Resources (OER) created a new way of learning based on sharing knowledge and re-sources. This is a great way to support lectures and enhance the learning experience, es-pecially in newly established universities that have limited access to traditional teaching resources.

Some of the recent develop-ments on OCW in Turkey are worth mentioning. TUBITAK (the Turkish Scientific Coun-cil and Research Council) is funding projects for digi-tizing course contents with media-rich tools (e.g., video, animation, interactivity, simulations) via its academic e-course (5002 call) program. The objective of this call was to provide a solution to the scarcity of learning materials in Turkish and making them available for all undergradu-ate students to improve the overall quality of the under-graduate programs in Turkey. TUBITAK is also providing funds for creating e-textbooks in Turkish in a variety of areas for undergraduate education in Turkey.

A considerable effort to incor-porate OCW into the Turkish higher education system was launched by TUBA (Turkish Academy of Sciences) in late 2006. Universities were encouraged to set up their

infrastructure to implement OER. The objective was to generate partial solutions to the problem of inadequate learning resources in the high-er education system. OCW ini-tiatives have been adopted by a large number of universities in Turkey in the last few years. More than 40 universities have deployed open course platforms and are sharing their education resources with the rest of the community. Middle East Technical Univer-sity created an OCW platform and shared more than 100 of their courses on the portal. TUBA has become a MIT-OCW translation affiliate and 35 MIT courses in a number of fields have been translated into Turkish including the lecture videos. Courses from Colum-bia University and Yale Univer-sity have also been translated under this category.

Relatively good improvements in Turkey’s communication infrastructure provide a large part of the country with broadband connectivity. Distance learning can be an efficient and effective training model to address the constant change in demand for skills and talents and can pro-vide means of occupational development for professionals in the workforce. The avail-ability of broadband connec-tivity and high-quality videos provide a new way of learning

for the younger generation. Micro College programs of the DaVinci Institute and the Nan-oDegree solution from Udac-ity and AT&T are innovative training programs catering to career shifting professionals in all sorts of industries. Also, re-liable and up-to-date content in Turkish may prove to be useful for supplying skills for a wider population with a lack of competency in English.

Global brain potential of Turkey and collective intelligence

Many of the developing coun-tries that suffered from brain drain in the past are now looking for ways of leverag-ing that potential rather than trying to reverse it—especially in today’s global environment where international trade is a major driver of economic growth.

The MIT Technology review recently published the finalists for its “innovators under 35” competition for Turkey. The list included ten outstanding young innovators, some of whom work for the world’s most important universities. It is another example of the out-standing Turkish human cap-ital working outside Turkey—and which could come back if Turkey could provide the right innovation ecosystem.

A study conducted on Turkish


entrepreneurs in Germany shed some light on the issue: all interviewees stated that the young population of Tur-key is a great asset, and that they are much more welcom-ing to the emerging technolo-gies and are fast adopters. It is a well-known fact, indeed, that language and cultural skills are important elements in the success of diaspora investors for their ventures in the homeland, and these elements were also cited as critical by the interview-ees. Apart from the obvious linguistic and cultural advan-tages, they also relate their decision to emotional factors and their desire to contribute to Turkey’s well-being.

As a welcome effect of Tur-key’s stable economic growth and the recent improvements in the higher education sys-tem, Turkey is attracting more foreign students (~ 70,000 in 2014) to its universities and becoming a major player in the higher education in its geographical area, a good as-pect in the light of local talent and Global Brain.

International higher education is a $400B industry. Turkey is not only getting a better share of that market now, but it is also having the advantage of putting that potential to use. Some of these graduates join the local talent pool in Turkey. Those who return to

their country of origin stay in touch with their contacts in Turkey, creating opportunities for industrial and academic collaboration.

Scaling the Future of Work in Turkey

As we have discussed above, the Future of Work is begin-ning to take hold in Turkey. We are still in the very early days of this revolution, but its transformational potential is enormous. Advanced Man-ufacturing techniques can substantially improve effi-ciency and productivity in key manufacturing sectors, such as automotive, white goods and other durable goods, which already play a major role in Turkey’s economic model. Greater productivity could boost these sectors’ competitiveness, allowing them to gain market share in global export markets. This would raise employment and incomes in Turkey, while also improving Turkey’s external balance of payments.

Advanced Manufacturing could also be instrumental in accelerating the growth of the healthcare and life scienc-es sectors, which would be fully in line with Turkey’s 2023 targets. Given its strategic location at the intersection of Europe, Asia and the MENA region, this could turn Turkey into a leading provider of

healthcare solutions across a wide range of countries.

Industrial Internet solutions could be scaled across industries, raising efficiency and productivity in traditional manufacturing sectors and spurring the development of new high-tech industries. Industrial Internet solutions could prove especially pow-erful in the energy sector, by raising energy efficiency and reducing both costs and emissions. Given that energy imports are a substantial burden on Turkey’s import bill, the energy efficiency gains that could be achieved thanks to the Industrial Internet would not only reduce costs to industry and consum-ers—making Turkey’s growth model more sustainable— but they would also contribute to reduce Turkey’s dependence on foreign financing.

Finally, a faster development of the Global Brain could make Turkey much more integrated with the global innovation ecosystem, accel-erating the pace of innovation carried out within the country and opening up new export opportunities.


The Next StepsThe power of the Industrial Internet, Advanced Manufac-turing, and the Global Brain are beginning to manifest in Turkey. But a lot needs to be done to allow the Future of Work to achieve scale and transform Turkey’s econo-my. Targeted and structural economic reforms, as well as boosting domestic savings and lowering energy de-pendency, will serve to both stabilize the economy as well as reduce externalities.

Investment in infrastructure will need to be accelerated, notably in communication infrastructure. The govern-ment’s decision to eliminate the tax burden on machine- to-machine SIM cards is a step in the right direction, but Turkey needs a faster and more far-reaching broadband network to support machine- to-machine communications and the development of Industrial Internet solutions at

scale.

Turkey’s innovation ecosys-tem has started to develop at a faster pace only during the last few years, with a number of national and regional initia-tives. The top-down approach followed so far, however, has encountered significant implementation challenges. The open and collaborative nature of the Future of Work innovations would favor a bottom-up approach, bringing together public and private sector entities, universities, multinational companies and a range of other players—and relying on PPPs for specific investment projects, leverag-ing “Living Labs,” promoting and stimulating the entrepre-neurial activities outside of university and outside of R&D institutions, and integrating entrepreneurial culture into curricula at all levels of formal education. TIM and Tech-noparks could adopt more

active roles, along with univer-sities and other NGOs.

The large number of SMEs already successful under the last framework program makes Turkey an attractive partner for research entities from the European Union, given Horizon 2020’s greater focus on the entire innova-tion chain—from the lab to the market. While Turkey can initially focus on tradi-tional areas such as energy, healthcare, defense, and agriculture, new areas such as data analytics and data-driv-en decision making processes combined, with its ICT experi-ence, could give competitive edges. While the increase in startups funding is encourag-ing, crowd-funding is still in an early stage of development in Turkey and needs a stronger legal framework to develop further.

Innovation and entrepre-

neurship will not only fuel the creation of new jobs, but will also help with the creation of a pipeline of intermediate skills for the larger local and international companies.

The development of human capital should be seen as a priority. Technological inno-vation will inevitably have a disruptive impact on the labor market. So far, the adverse impact in Turkey has been minimal, partly because new technologies have increased efficiency and competitive-ness, leading to higher output and, therefore, more hiring rather than layoffs. But as the range of tasks that machines can perform better than hu-mans expands, more jobs will be displaced by automation and robotics (e.g., Advanced Manufacturing).

The education system and in-dustry will need to stay ahead of the game to ease the tran-


sition and make sure that new generations of workers have the right skills to thrive as new technologies take hold. Both education and work-place training should evolve towards a culture of lifelong learning, re-skilling and adaptability. To this purpose, they should also leverage new education technologies, such as open online courses, and encourage stronger employ-er-provided training. While the quality of the workforce is similar to many other emerging markets, improving labor market regulations and expanding the labor force par-ticipation rate will be essential for growth.

Investment incentives in Turkey should be geared to create a skilled labor force in addition to providing financial resources. In line with the industrial focus, education should focus on key sectors such as data science, biotech-nology and mechatronics. Special immigration policies for quality talent should be in place, and regulations for hiring a foreign workforce in designated fields should be in effect to simplify and speed up the process of hiring foreign talent to ignite the needed talent locally.

With the advance of ICT, social media, podcasts, videos and forums have become an inte-gral part of the open courses

in addition to the traditional set of tools used for learning. Turkey needs good and useful examples of remote learning to create easy and affordable access to content, especially for professional development.

Turkey should explore ways in which the diaspora work-force can be incentivized to collaborate with the workforce at home, and, in some cases, even return to work in Turkey. A platform with a database of Turkish professionals abroad, a collection of skill maps all over the world, would be a useful source of information for companies and entrepre-neurs in Turkey to find collab-orators or consultants they can go to for problem solving or expanding their businesses to other parts of the world.

The increasing availability and accessibility of the Internet creates a participatory culture that manifested itself in sev-eral different forms of col-laboration in the last decade. They hold a great potential for growth if the legal framework can be fine-tuned quickly while interest is on the rise.

Turkey’s strong entrepreneur-ial tradition and openness to change and innovation imply that the country is well placed to take advantage of the Fu-ture of Work wave of innova-tions; and the success stories already evident in Industrial

Internet and Advanced Man-ufacturing technologies are further proof. Turkey needs to look within herself, dust off centuries-old artisanship (e.g., Mimar Sinan), its culture of tolerance (e.g., Rumi) and collaboration (e.g., “imece”), and revive its centuries-old risk-taking culture.


ConclusionsA new wave of innovation, the Future of Work, is bringing a dramatic transformation in industry. The Future of Work is driven by three fundamental forces: the Industrial Internet, Advanced Manufacturing, and the Global Brain. It is centered on the convergence of the digital world of software and analytics with the physical world of industry.

Through the power of interconnectedness, industrial equipment acquires a much broader and powerful range of capabilities—we enter the age of brilliant machines. Industrial companies that combine the digital and the physical to produce intercon-nected industrial devices open entirely new dimensions in the way they operate and in the value they can provide to custom-ers and shareholders. This results in greater speed, efficiency and productivity, substantial costs savings and enhanced competitiveness.

The Future of Work has already begun to take hold in Turkey— there is a vibrant Makers Movement, we have already seen a number of successful high-tech startups, and additive manu-facturing and robotics are making inroads in several areas of manufacturing. But a lot more needs to be done. Turkey needs to bolster infrastructure, create a more cohesive innovation ecosystem, strengthen its education system and launch a new wave of economic reforms. Decisive and coordinated action by both public and private sector players would allow the Future of Work to take hold and achieve scale—boosting productivity and efficiency, rebooting Turkey’s economic growth, and sustaining robust growth in jobs and living standards.


Authors & AcknowledgementsAuthorsMarco Annunziata, PhD, GE Chief Economist

Murat Uçer, Economist, Co-founder Datamonitor, Faculty at Department of Economics, Koc University

Metin Under, Journalist

Assoc. Prof. Selim Balcısoy, Entrepreneur & Faculty at Engineering & Natural Sciences, Sabancı University

Prof. Ahmet Duyar, Entrepreneur & Faculty at Mechanical Engineering, Ozyegin University

Berrin Benli, Founder Innovation & Big Data Institute

Halil Aksu, Entrepreneur & Futurist

Sait Olmez, PhD, Entrepreneur & Director of IT & Data Analyt-ics Graduate Program, Sabancı University

AcknowledgementsWe would like to thank the many contributors to this paper. In particular, we extend our deep appreciation to Canan Ozsoy, Rania Rostom, Oyken Cesur, Mustafa Serbest, Ozge Yamaner, Evrim Erdogus, Koray Tuna, Aysem Sargin Isil, Ozlem Aksoy, Kerem Bugay, Shlomi Kramer, and Erdogan Cesmeli.

twitter.com/GE_Turkiye

geturkiyeblog.com

Documents

Turkey fof w paper nov14